ZAMBIA should consider developing a mineral revenue sharing plan to attain an upper middle income nation status, Centre for Trade Policy and Development (CTPD) has said.
Meanwhile, Government has been urged to broaden the tax base particularly in view of rampant tax avoidance and evasion.
According to a policy brief on mineral revenue sharing mechanism ‘Reflection for Zambia’, conducted by the CTPD, extractive industries have the potential to be a driving force for economic development.
The brief, however, says this is largely dependent on having systems in place that safeguard interests of the people.
The brief says the function of a resource revenue sharing initiative is to define a system for the allocation of social investments by companies and disbursements of project-related taxes, royalties and other transfers paid by companies.
“Resource revenue sharing regimes fall under three general categories; stabilisation funds, future generation funds and sustainable economic development revenue regimes,” the brief says.
Zambia’s Mines and Minerals Act of 2008 has a provision for mineral revenue sharing mechanism, which has not yet been implemented.
The government’s official position is that they are still working on developing a system.
CTPD has since urged Government to broaden the tax base, particularly in the face of rampant tax avoidance and evasion.
“The government should consider holding equity not only in the local subsidiary of multinational mining companies but their mother corporations as well,” the brief says
The brief says Government has continued to rely on taxes as the main source of financial benefit from the extractive industry.
Other recommendations made were that Government should consider establishing a revenue stabilisation fund that will ensure the Government is able to maintain expenditure levels even during periods of financial crises.
The organisation says the resource revenue sharing mechanism must be simple, transparent, understood by stakeholders and continue to be revised in order to reflect the changing political and economic circumstances.